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Big foreign investors change Vietnam’s online marketplace
The Hanoitimes – Vietnam’s online marketplace is developed rapidly given by big investments of foreign players, which has helped local consumers access to better quality services at more reasonable prices.
Foreign players have so far spent aggressively in the market and even accepted losses to gain top positions. According to the Map of E-commerce in Vietnam recently published by Iprice Insight, Shopee has beat Lazada to become the top e-commerce platform by traffic in the third quarter of this year. This is the first time Lazada has lost the top position since the second quarter of 2017.
Statistics from Iprice Insight, which is an online shopping aggregator’s portal of 7 ASEAN markets, showed that Shopee had a monthly average traffic of 34.5 million in the quarter while the number for Lazada was 30.2 million.
Other players in the top five included Tiki with 29.4 million traffic per month, Sendo with 20.7 million and Adayroi with 5.3 million.
However, the ranking is forecast to see significant changes in the last quarter of this year when e-commerce platforms will offer more promotion and discount programs to stimulate shopping as the year-end approaches and local consumers will be the most beneficiaries.
According to experts, the Vietnamese online marketplace is gradually becoming a playground for global giants as the top four, including Shopee, Lazada, Tiki and Sendo, all received foreign funding.
Billionaire Jack Ma has invested US$4 billion in Lazada. Garena (now called Sea), Shopee’s holding company, is also generous in spending money in key markets of Singapore, Malaysia, Indonesia, Thailand, the Philippines, Taiwan (China) and Vietnam.
China’s largest retailer, JD.com, poured US$44 million into Tiki at the beginning of this year, following VNG, and has become a large shareholder in the firm. The proportion of foreign investment into Tiki has reached more than 40 percent.
Online trading platform Sen Do recently received US$51 million from investors in Japan, South Korea and Taiwan.
Long-term investments
Many foreign giants have continuously invested in the market even as they incur losses in short terms, because they still see the long-term potential of the country’s rapidly expanding online shopping sector.
Market research firm eMarketer estimated that Vietnam’s online market is valued at some US$1.7 billion, accounting for only some 1.1 percent of Vietnam’s total retail market value and much lower than the 7 percent rate of the global market. Despite the small proportion, the Vietnamese e-commerce market grows by more than 20 percent on average yearly.
According to experts, the high potential has attracted foreign investors to the market to readily catch the big opportunities when the market booms by 2025 with revenue of US$7.5 billion as predicted by Google and Temasek.
There is still a long way to go for the Vietnamese e-commerce market to reach its peak, so foreign companies like Alibaba, JD.com and Sea have invested in the country early to get ahead of the curve, the experts said.
Trade expert Vu Vinh Phu said that foreign investors are continuing to increase their presence in Vietnam’s e-commerce market despite losses, as their current goal is to attract customers, stretching their influence in the market.
Echoing Phu, Nguyen Manh Dung, head of the Vietnam and Thailand Office under CyberAgent Ventures, said that e-commerce requires a long-term investment, and investors could start to earn profits after five to 10 years of operation.
Even Amazon in some markets has only started making a profit after 10 years of investment, Dung said, adding with fierce competition in Vietnam, it is likely to take e-commerce firms some time before they start reaping the rewards.
Source: http://www.hanoitimes.vn/economy/2018/10/81E0CE43/big-foreign-investors-change-vietnam-s-online-marketplace/